When Harring took over global supply chain operations for Electrolux, he wanted to develop some ideas that had first come to him while running Electrolux's supply chain in Europe. "I thought that as a company we were focusing too much on volume and not enough on value," he says. "So when I moved into global operations, I wanted to see how we might do some things differently to better support our business strategy."
Harring visited and talked with executives and stakeholders in all of the company's four sectors - North America, South America, Asia Pacific and Europe/MiddleEast/Africa. He found a consensus on the need for better processes to enable fact-based decisions. This ultimately led to development of a global Sales and Operations Planning program that the company is rolling out.
There are many challenges associated with a global roll-out, Harring says. "Our intention with this strategy is to become one Electrolux, but when you go out there you find that one size does not fit all," he says. Regional operations vary greatly in their maturity levels, "so we have to start with people where they are and begin to build the S&OP process and increase workforce capabilities. This is a long process."
The second big challenge is to make sure that there is one set of numbers across all sectors. "To drive collaborative forecasting, for example, we must be much more fact based, so we have to get the numbers right," he says.
The third-biggest challenge concerns the governance structure, Harring says. "If you look at a region like the EU, there are 36 different countries, plus the Middle East and Africa, so we had to build a governance structure for the country level, the cluster level and the sector level," he says.
Since one size does not and cannot fit all, the priority is to have a standardized framework within which each sector can build its own S&OP structure. "We are defining a framework and standards for hundreds of S&OP processes," Harring says. To reinforce these the company is creating a certification process that will launch in 2014. "We want to certify the processes being used and even the people working with S&OP," says Harring. This will reinforce the standards and identify areas where more work is needed to get employees to the next level.
While the roll-out at Electrolux is ongoing, Harring says the company already is seeing improvements in its sales forecast accuracy. "Additionally, inventory levels are significantly reduced and we have a much more positive atmosphere. This is because we no longer are walking around the elephant in the room - we are recognizing it and talking about it."
This is an important element because S&OP is not just about number crunching. "S&OP enables fact-based discussions about the challenges and constraints of your business strategy," he says. "If you are able to be open about the constraints, you can have clarity around the alternatives and the best plan for execution. Then you are able to get the commitment you need."
